On Wednesday the Queen’s Speech – a speech for ‘working people’ as described by David Cameron – announced the government’s proposed legislation for its first year in Parliament. Although it didn’t include direct action on two controversial areas – scrapping the Human Rights Act and the hunting ban – it did contain some important points for businesses.
Most notably, the speech announced legislation to enable a referendum on Britain’s membership of the EU by 2017. Business has been divided in the news recently with the CBI supporting the UK retaining its membership in a reformed EU, but the head of JCB and others arguing that a ‘Brexit’ would not be a problem. Red tape from Brussels, VAT rules and the Franco-German plan for a basic EU-wide corporation tax are key arguments in favour of leaving, whilst some businesses and banks fear a Brexit would reduce their access to key markets. Some companies have raised the concern that although they don’t directly rely on the EU, their key clients are firms that would be affected by a Brexit, so the discussion is likely to be fierce and prolonged. Mr Cameron has now begun his tour of EU capitals, so it will be interesting to see what the famous re-negotiation creates.
The new Enterprise Bill is designed to directly assist SMEs by reducing ‘red tape’ by at least £10bn. The details will be debated over the coming months, but we do know it will include a new Small Business Conciliation Service aimed at helping to settle disputes between small and large businesses – particularly over late payment practices. Let’s hope some of the red tape reduction will free up employment law as well.
For employees the National Insurance Contributions and Finance Bill will enact the Conservatives’ pledge to ensure there are no rises in income tax rates, VAT or national insurance before 2020 and that no-one working 30 hours on the minimum wage will pay any income tax at all. Passed before the speech, law has now been enacted to ban exclusivity clauses in zero hours contracts. The contracts themselves though have not been outlawed. Helpful for workers and employers alike, the Childcare Bill will introduce the free childcare allowance from 15 to 30 hours per week.
What do employers need to watch out for?
The Immigration Bill will treat illegal workers as criminals and seize their wages as well as fining the companies that employ them up to £20,000 per worker. It will also become an offence for businesses and recruitment agencies to hire abroad without first advertising in the UK. This is a regulation employers could easily miss, so watch out for it.
Companies and HR departments may need to update their drugs policies or give further guidance, as the speech proposed a bill to create a blanket ban on so-called ‘legal highs’. There is a lot of confusion over such substances, with workers and employers alike not fully understanding what is legal and what is not.
Whilst few SMEs will benefit directly, the Trade Union Bill will raise the voting threshold for union strike ballots to a 50% turnout and state that 40% of those entitled to vote must back action. This will apply to the essential public services - health, education, fire and transport.
So what’s the verdict? With a slender Commons majority, the speech is cautious yet follows the main business points of the Conservative manifesto.
As you expect, there’s a mixed reaction from business. Many have said that the measures will prove incrementally helpful, but they are not the dynamic boost needed to power SMEs, which form such a large part of Britain’s economy. However a reduction in red tape and an increase in efforts to ensure SMEs are paid on time would certainly be useful.
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